CONVENTION BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE SOCIALIST
REPUBLIC OF ROMANIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF
FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

Notification
No. G. S. R. 80(E), dtd. 08.02.1988.

Notification
No.7754

Whereas
the annexed Convention between the Government of the Republic of India and the
Government of the Socialist Republic of Romania for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
has come into force on the 14th November, 1987, on the exchange of the
Instruments of Ratification by both the contracting States, as required by
paragraph 1 of Article 31 of the said Convention;

Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), and section 24A of the Companies (Profits) Surtax Act,
1964 (7 of 1964), the Central Government hereby directs that all the provisions
of the said Convention shall be given effect to in the Union of India.

ANNEXURE

CONVENTION
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE
SOCIALIST REPUBLIC OF ROMANIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

The
Government of the Republic of India and the Government of the Socialist
Republic of Romania desiring to conclude a Convention for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income and to promote and strengthen the economic relations between the two
countries on the basis of equality in rights and reciprocal advantage.

Have
agreed as follows:

Article
1

PERSONAL
SCOPE

This
Convention shall apply to persons who are residents of one or both of the
Contracting States.

Article
2

TAXES
COVERED

1.The taxes to which
this Convention shall apply are:

a.In the case of India:

1.Income-tax and any
surcharge thereon; and

2.Surtax;

(hereinafter
referred to as "Indian tax").

a.

b.In the case of
Romania:

1.the tax on incomes
derived by individuals and corporate bodies;

2.the tax on the
profits of joint companies constituted with the participation of some Romanian
economic organisations and some foreign partners; and

3.the tax on income
realised from agricultural activities;

(hereinafter
referred to as "Romanian tax").

1.

2.The Convention shall
also apply to any identical or substantially similar taxes which are imposed by
either Contracting State after the date of signature of the present Convention
in addition to, or in place of, the taxes referred to in paragraph 1.

3.The competent
authorities of the Contracting States shall notify to each other any
significant changes which are made in their respective taxation laws which are
the subject of this Convention and furnish copies of relevant enactments and
regulations.

Article
3

GENERAL
DEFINITIONS

1.In this Convention,
unless the context otherwise requires:

a.the term
"India" means the territory of India and includes the territorial sea
and air space above it, as well as any other maritime zone in which India has
sovereign rights, other rights and jurisdictions, according to the Indian law
and in accordance with international law;

b.the term
"Romania" used in a geographical sense, means the territory of the
Socialist Republic of Romania including the territorial sea and the continental
shelf as well as any other area beyond the territorial waters of Romania where
Romania exercises sovereign rights, in accordance with the international law
and with its own law concerning the exploration and exploitation of the
natural, biological and mineral resources existing in the sea, waters, seabed
and subsoil of these waters

c.the terms "a
Contracting State" and "the other Contracting State" mean India
or Romania as the context requires;

d.the term
"tax" means Indian tax or Romanian tax, as the context requires, but
shall not include any amount which is payable in respect of any default or
omission in relation to the taxes to which this Convention applies or which
represents a penalty imposed relating to those taxes;

e.the term
"person" shall have the meaning assigned to it in the taxation laws
in force in the respective Contracting States;

f.the term
"company" means any body corporate, including a joint company which
is incorporated under the Romanian law or any entity which is treated as a
company under the taxation laws of the respective Contracting States;

g.the term
"enterprise of a Contracting State" and "enterprise of the other
Contracting State" mean, respectively, an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident of
the other Contracting State;

h.the term
"competent authority" means in the case of India the Central
Government in the Ministry of Finance (Department of Revenue) or their
authorised representative, and in the case of Romania the Ministry of Finance
or its authorised representative;

i.the term
"national" means:- in the case of India, any individual possessing
the nationality of India and any legal person, partnership or association
deriving its status from the laws in force in India; in the case of Romania,
any individual possessing the citizenship of Romania and any legal person,
partnership or association deriving its status from the laws in force in
Romania:

j.the term "a
political sub-division" means a political sub-division in India;

l.the term
"international traffic" means any transport by a ship or aircraft
operated by an enterprise of a Contracting State, except when the ship or
aircraft is operated solely between places in the other Contracting State.

1.

2.In the application of
the provisions of this Convention by one of the Contracting States, any term
not defined herein shall, unless the context otherwise requires, have the
meaning which it has under the laws in force in that State relating to the
taxes which are the subject of this Convention.

Article
4

FISCAL
DOMICILE

1.For the purposes of
this Convention, the term "resident of a Contracting State" means any
person who is a resident of that State in accordance with the taxation laws of
that State.

2.Where by reason of
the provision of paragraph 1, an individual is a resident of both Contracting
States, then, his residential status for the purposes of this Convention shall
be determined in accordance with the following rules:-

a.He shall be deemed to
be a resident of the Contracting State in which he has a permanent home
available to him. If he has a permanent home available to him in both
Contracting States, he shall be deemed to be a resident of the Contracting
State with which his personal and economic relations are closer (hereinafter
referred to as his "centre of vital interests");

b.If the Contracting
States in which he has his centre of vital interests cannot be determined or if
he does not have a permanent home available to him in either Contracting State,
he shall be deemed to be a resident of the Contracting State in which he has an
habitual abode;

c.If he has an habitual
abode in both Contracting States or in neither of them, he shall be deemed to
be a resident of the Contracting State of which he is a national;

d.If he is a national
of both Contracting States or of neither of them, the competent authorities of
the Contracting States shall settle the question by mutual agreement.

1.

2.

3.Where by reason of
the provisions of paragraph 1, a person other than an individual is a resident
of both Contracting States, then it shall be deemed to be a resident of the
Contracting State in which its place of effective management is situated.

Article
5

PERMANENT
ESTABLISHMENT

1.For the purposes of
this Convention, the term "Permanent establishment" means a fixed
place of business through which the business of the enterprise is wholly or
partly carried on.

2.The term
"permanent establishment" includes especially:

a.a place of
management;

b.a branch;

c.an office;

d.a factory;

e.a workshop;

f.a mine, an oil or gas
well, a quarry or any other place of extraction of natural resources;

g.a warehouse in
relation to a person providing storage facilities for others;

h.a farm, plantation or
other place where agriculture, forestry, plantation or related activities are
carried on;

i.a premises used as a
sales outlet or for receiving or soliciting orders;

j.an installation or
structure used for the exploration of natural resources;

k.a building site or
construction, installation or assembly project or supervisory activities in
connection therewith, where such site, project or supervisory activity
(together with other such sites, projects or activities, if any) continues for
a period of more than six months, or where such project or supervisory
activity, being incidental to the sale of machinery or equipment, continues for
a period not exceeding six months and the charges payable for the project or
supervisory activity exceed 10 per cent. of the sale price of the machinery or
equipment.

1.

2.

3.Notwithstanding the
preceding provisions of this article, the term "permanent
establishment" shall be deemed not to include;

a.the use of facilities
solely for the purpose of storage or display of goods or merchandise belonging
to the enterprise;

b.the maintenance of a
stock of goods or merchandise belonging to the enterprise solely for the
purpose of storage or display;

c.the maintenance of a
stock of goods or merchandise belonging to the enterprise solely for the
purpose of processing by another enterprise;

d.the maintenance of a
fixed place of business solely for the purpose of purchasing goods or
merchandise or for collecting the information for the enterprise;

e.the maintenance of a
fixed place of business solely for the purpose of advertising, for the supply
of information, for scientific research, or for similar activities which have a
preparatory or auxiliary character for the enterprise;

f.the selling of goods
or merchandise belonging to the enterprise displayed in an occasional temporary
fair or exhibition in the process of closing down of such fair or exhibition;

g.project or
supervisory activity, being incidental to sale of machinery or equipment,
carried on by an enterprise other than the seller of machinery or equipment and
not continuing for a period exceeding six months.

However,
the provisions of sub-paragraphs (a) to (g) shall not be applicable where the
enterprise maintains any other fixed place of business in the other Contracting
State for any purposes other than the purposes specified in the said
sub-paragraphs.

1.

2.

3.

4.Notwithstanding the
provisions of paragraphs 1 and 2 where a person-other than an agent of an
independent status to whom paragraph 5 applies-is acting in a Contracting State
on behalf of an enterprise of the other Contracting State, that enterprise
shall be deemed to have a permanent establishment in the first-mentioned State,
if:

a.he has and habitually
exercises in that State an authority to conclude contracts on behalf of the
enterprise, unless his activities are limited to the purchase of goods or
merchandise for the enterprise;

b.he has no such
authority, but habituallty maintains in the first-mentioned State a stock of
goods or merchandise from which he regularly delivers goods or merchandise on
behalf of the enterprise; or

c.he habitually secures
orders in the first-mentioned state, wholly or almost wholly for the enterprise
itself or for the enterprise and other enterprises controlling, controlled by,
or subject to the same common control as, that enterprise.

1.

2.

3.

4.

5.An enterprise of a
Contracting State shall not be deemed to have a permanent establishment in the
other Contracting State merely because it carried on business in that other
State through a broker, general commission agent or any other agent of an
independent status provided that such persons are acting in the ordinary course
of their business. However, when the activities of such an agent are devoted
wholly or almost wholly on behalf of that enterprise itself or on behalf of
that enterprise and other enterprises controlling, controlled by, or subject to
the same common control as, that enterprise, he will not be considered an agent
of an independent status within the meaning of this paragraph.

6.The fact that a
company which is a resident of a Contracting State controls or is controlled by
a company which is a resident of the other Contracting state, or which carried
on business in that other Contracting State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.

Article
6

INCOME
FROM IMMOVABLE PROPERTY

1.Income from immovable
property may be taxed only in the Contracting State in which such property is
situated.

2.The term
"immovable property" shall be defined in accordance with the law and
usage of the Contracting State in which the property is situated. The term
shall in any case include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to which the provisions
of general law respecting landed property apply, usufruct of immovable property
and rights to variable or fixed payments as consideration for the working of,
or the right to work, mineral deposits, oil wells, quarries and other places of
extraction of natural resources. Ships and aircraft shall not be regarded as
immovable property.

3.The provisions of
paragraph 1 shall apply to income derived from the direct use, letting, or use
in any other form of immovable property.

4.4.The provisions of
paragraphs 1 and 3 shall also apply to income from immovable property of an
enterprise and to income from immovable property used for the performance of
independent personal services.

Article
7

BUSINESS
PROFITS

1.The profits of an
enterprise of a Contracting State shall be taxable only in that State unless
the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business
as aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to (a) that permanent establishment;
(b) sales in that other State of goods or merchandise of the same or similar
kind as those sold through that permanent establishment; or (c) other business
activities carried on in that other State of the same or similar kind as those
effected through that permanent establishment.

2.Subject to the
provisions of paragraph 3, where an enterprise of a Contracting State carries
on business in the other Contracting State through a permanent establishment
situated therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected to make if it
were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly
independently with the enterprise of which it is a permanent establishment. In
any case where the correct amount of profits attributable to a permanent
establishment is incapable of determination or the determination thereof
presents exceptional difficulties, the profits attributable to the permanent establishment
may be estimated on a reasonable basis.

3.In the determination
of the profits of a permanent establishment, there shall be allowed as
deductions expenses which are incurred for the purposes of the business of the
permanent establishment including executive and general administrative expenses
so incurred whether in the State in which the permanent establishment is
situated or elsewhere, in accordance with the provisions of the taxation laws
of that State. However, no such deduction shall be allowed in respect of
amounts, if any, paid (otherwise than towards reimbursement of actual expenses)
by the permanent establishment to the head office of the enterprise or any of
its other offices, by way of royalties, fees or other similar payments in
return for the use of patents, know-how or other rights, or by way of
commission or other charges, for specific services performed or for management,
or except in the case of a banking enterprise, by way of interest on moneys
lent to the permanent establishment. Likewise, no account shall be taken, in
the determination of the profits of a permanent establishment, for amounts
charged (otherwise than towards reimbursement of actual expenses), by the
permanent establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments in return
for the use of patents, know-how or other rights, or by way of commission or
other charges for specific services performed or for management, or except in
the case of a banking enterprise, by way of interest on moneys lent to the head
office of the enterprise or any of its other offices.

4.No profits shall be
attributed to a permanent establishment by reason of the mere purchase by that
permanent establishment of goods or merchandise for the enterprise.

5.For the purposes of
the preceding paragraphs, the profits to be attributed to the permanent
establishment shall be determined by the same method year by year unless there
is good and sufficient reason to the contrary.

6.Where profits include
items of income which are dealt with separately in other articles of this
Convention, then the provisions of those articles shall not be affected by the
provisions of this article.

Article
8

AIR
TRANSPORT

1.Profits derived by an
enterprise of a Contracting State from the operation of aircraft in
international traffic shall be taxable only in that State.

2.The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.

3.For the purposes of
this article, interest on funds connected with the operation of aircraft in
international traffic shall be regarded as profits derived from the operation
of such aircraft, and the provisions of article 12 shall not apply in relation
to such interest.

4.The term
"operation of aircraft" shall mean business of transportation by air
of passengers, mail, livestock or goods carried on by the owners or lessees or
charterers of aircraft, including the scale of tickets for such transportation
on behalf of other enterprises, the incidental lease of aircraft and any other
activity directly connected with such transportation.

Article
9

SHIPPING

1.Profits derived by an
enterprise of a Contracting State from the operation of ships in international
traffic shall be taxable only in that State.

2.Notwithstanding the
provisions of paragraph 1, such profits may also be taxed in the other
Contracting State if the shipping activities connected with the operation of
ships in international traffic are carried on in that other State, but the tax
so charged shall not exceed 2.50 per cent. of the gross amount payable in
respect of operation of ships in that other State.

3.The provisions of
paragraphs 1 and 2 shall also apply to profits from the participation in a
pool, a joint business or an international operating agency engaged in the
operation of ships.

4.For the purposes of
this article, the gross amount payable in respect of operation of ships in a
Contracting State shall mean the aggregate of the following amounts, namely:-

a.the gross amount
payable on account of carriage of passengers, livestock, mail or goods shipped
at a port or ports in that Contracting State;

b.interest arising in
that Contracting State on funds connected with the operation of ships in international
traffic; and

c.the gross amount
payable in that State on account of the use, maintenance or rental of
containers (including trailers and related equipment for the transport of
containers) in connection with the transport of goods or merchandise in
international traffic. The provisions of article 12 shall not apply in relation
to interest referred to in (b) above.

1.

2.

3.

4.

5.In determining the
income of an enterprise of a Contracting State for the purposes of taxation in
the other Contracting State, no deduction shall be allowed in respect of any
loss or depreciation allowance admissible to that enterprise for any earlier "previous
year" or "calendar year", as the case may be.

Article
10

ASSOCIATED
ENTERPRISES

Where

a.an enterprise of a
Contracting State participates directly or indirectly in the management control
or capital of an enterprise of the other Contracting State, or

b.the same persons
participate directly or indirectly in the management, control or capital of an
enterprise of a Contracting State and an enterprise of the other Contracting
State,

and
in either case conditions are made or imposed between the two enterprises in
their commercial or financial relations which differ from those which would be
made between independent enterprises, then only the profits which would, but
for those conditions, have accrued to one of the enterprises, but, by reason of
those conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.

Article
11

DIVIDENDS

1.Dividends paid by a
company which is resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other State.

2.However, such
dividends may also be taxed in the Contracting state of which the company
paying the dividends is a resident and according to the laws of that State, but
if the recipient is the beneficial owner of the dividends, the tax so charged
shall not exceed:

a.15 per cent. of the
gross amount of the dividends if the beneficial owner is a company which owns
at least 25 per cent. of the shares of the company paying the dividends;

b.20 per cent. of the
gross amount of the dividends in all other cases. This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.

1.

2.

3.The term
"dividends" as used in this article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident. In this context, the profits distributed by
Romanian Joint Companies to the capital subscribers are assimilated to
dividends.

4.The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,
being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident,
through a permanent establishment situated therein or performs in that other
State independent personal services from a fixed base situated therein, and the
holding in respect of which the dividends are paid is effectively connected
with such permanent establishment or fixed base. In such cases, the provisions
of article 7 or article 16 as the case may be, shall apply.

5.Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company except in so far as such dividends are paid to a resident
of that other State or so far as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed
base situated in that other State, nor subject the company's undistributed
profits to a tax on the company's undistributed profits, even if the dividends
paid or the undistributed profits consist wholly or partly of profits or income
arising in such other state.

Article
12

INTEREST

1.Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other state.

2.However, such
interest may also be taxed in the Contracting State in which it arises and
according to the laws of that State, but if the recipient is the beneficial
owner of the interest, the tax so charged shall not exceed 15 per cent. of the
gross amount of the interest.

3.Notwithstanding the
provisions of paragraph 2,-

a.interest arising in a
Contracting State shall be exempt from tax in that state provided it is derived
and beneficially owned by:

i.the
Government, a political sub-division, an administrative territorial unit, or a
local authority of the other Contracting State; or

ii.the
Central Bank of the other Contracting State;

a.

b.interest arising in a
Contracting State shall be exempt from tax in that state if it is beneficially
owned by a resident of the other Contracting State and is derived in connection
with a loan or credit extended or endorsed by:

i.in
the case of Socialist Republic of Romania, BANCA ROMANA DE COMERT EXTERIOR to
the extent such interest is attributable to financing of exports and imports
only;

ii.in
the case of India, the Export-Import Bank of India (Exim Bank), to the extent
such interest is attributable to financing of exports and imports only;

iii.any
institution of a Contracting State in charge of public financing of external
trade;

iv.any
other person provided that the loan or credit is approved by the Government of
the first-mentioned Contracting State.

1.

2.

3.

4.The term
"interest" as used in this article means income from debt- claims of
every kind, whether or not secured by mortgage and whether or not carrying a
right to participate in the debtor's profits, and in particular, income from
Government securities and income from bonds or debentures, including premiums
and prizes attaching to such securities, bonds or debentures. Penalty charges for
late payment shall not be regarded as interest for the purpose of this article.

5.The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State, carries on business in the other Contracting
State in which the interest arises, through a permanent establishment situated
therein, or performs in that other State independent personal services from a
fixed base situated therein, and the debt-claim in respect of which the
interest is paid is effectively connected with such permanent establishment or
fixed base. In such cases, the provisions of article 7 or article 16, as the
case may be, shall apply.

6.Interest shall be
deemed to arise in a Contracting State when the payer is that Contracting State
itself, a political sub-division, an administrative territorial unit, a local
authority or a resident of that State. Where, however, the person paying the
interest, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base, then such
interest shall be deemed to arise in the Contracting State in which the
permanent establishment or fixed base is situated.

7.Where by reason a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been agreed
upon by the payer and the beneficial owner in the absence of such relationship,
the provisions of this article shall apply to the last-mentioned amount. In
such cases, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this convention.

Article
13

COMMISSION

1.Commission arising in
a Contracting State and paid to a resident of the other Contracting State may
be taxed in that other State.

2.However, such commission
may be taxed in the Contracting State in which it arises and according to the
law of that State, but the tax so charged shall not exceed 5 per cent. of the
amount of the commission. The competent authorities of the Contracting State
shall, by mutual agreement, settle the mode of application of this limitation.

3.The term
"commission" as used in this article means a payment made to a
broker, a general commission agent or to any other person assimilated to such a
broker or agent by the taxation law of the Contracting state in which such
payment arises.

4.The provisions of
paragraphs 1 and 2 shall not apply if the recipient of the commission, being a
resident of a Contracting State, has in the other Contracting State in which
the commission arises a permanent establishment with which the activity giving
rise to the commission is effectively connected. In such a case, the provisions
of article 7 shall apply.

5.Commission shall be
deemed to arise in a Contracting State when the payer is that State itself, a
political sub-division, an administrative territorial unit, a local authority
or a resident of that State. Where, however, the person paying the commission,
whether he is a resident of a Contracting State or not, has in a Contracting
State a permanent establishment in connection with which the activities for
which the payment is made was incurred, and such commission is borne by such
permanent establishment, then such commission shall be deemed to arise in the
Contracting State in which the permanent establishment is situated.

6.Where by reason of a
special relationship between the payer and the recipient or between both of
them and some other person, the amount of the commission, having regard to the
transaction for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the recipient in the absence of such relationship,
the provisions of this article shall apply only to the last mentioned amount.
In such cases, the excess part of the payment shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Convention.

Article
14

ROYALTIES
AND FEES FOR TECHNICAL SERVICES

1.Royalties and fees
for technical services arising in a Contracting State and paid to a resident of
the other Contracting State may be taxed in that other state.

2.However, such
royalties and fees for technical services may also be taxed in the Contracting
State in which they arise and according to the laws of that State but if the
recipient is the beneficial owner of the royalties, or fees for technical
services, the tax so charged shall not exceed 22.5 per cent. of the gross
amount of the royalties or fees for technical services.

3.The term
"royalties" as used in this article means payments of any kind received
as a consideration for the use of, or the right to use any copyright of
literary, artistic or scientific work, including cinematograph films or films
or tapes used for radio or television broadcasting any patent, trade mark,
design or model, plan, secret formula or process, or for the use of, or the
right to use, industrial, commercial or scientific equipment, or for
information concerning industrial, commercial or scientific experience.

4.The term "fees
for technical services" as used in this article means payments of any
amount to any person other than payments to an employee of a person making
payments, in consideration for the services of a managerial, technical or
consultancy nature, including the provision of services of technical or other
personnel.

5.The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or
fees for technical services, being a resident of a Contracting State, carries
on business in the other Contracting State in which the royalties or fees for technical
services arise, through a permanent establishment situated therein, and
performs in that other State independent personal services from a fixed base
situated therein, and the right, property or contract in respect of which the
royalties or fees for technical services are paid is effectively connected with
such permanent establishment or fixed base. In such cases, the provisions of
article 7 or article 16, as the case may be, shall apply.

6.Royalties and fees
for technical services shall be deemed to arise in a Contracting State when the
payer is that State itself, a political sub-division, an administrative
territorial unit, a local authority or a resident of that state. Where,
however, the person paying the royalties or fees for technical services,
whether he is a resident of a Contracting State or not, has in a Contracting
State a permanent establishment or a fixed base in connection with which the
liability to pay the royalties or fees for technical services was incurred, and
such royalties or fees for technical services are borne by such permanent
establishment or fixed base, then such royalties or fees for technical services
shall be deemed to arise in the State in which the permanent establishment or
fixed base is situated.

7.Where, by reason of special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of royalties or fees for technical services
paid exceeds the amount which would have been paid in the absence of such
relationship, the provisions of this article shall apply only to the
last-mentioned amount. In such cases, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Convention.

Article
15

CAPITAL
GAINS

1.Gains derived by a
resident of a Contracting State from the alienation of immovable property
referred to in article 6 and situated in the other Contracting State may be
taxed in that other State.

2.Gains from the
alienation of movable property forming part of the business property of a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting state or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services, including such
gains from the alienation of such a permanent establishment (alone or with the
whole enterprise) or of such fixed base, may be taxed in that other State.

3.Gains arising from a
capital asset being ships or aircraft operating in international traffic or
movable property pertaining to the operation of such ships or aircraft by an
enterprise of a Contracting state shall be taxable only in the Contracting
State in which the place of effective management of the enterprise is situated.

4.Gains from the
alienation of shares of the capital stock of a company the property of which
consists directly or indirectly principally of immovable property situated in a
Contracting State may be taxed in that State.

5.Gains from the
alienation of any property other than that referred to in paragraphs 1,2,3 and
4 shall be taxable only in the Contracting State of which the alienator is a
resident.

Article
16

INDEPENDENT
PERSONAL SERVICES

1.Income derived by an
individual who is a resident of a Contracting State from the performance of
professional services or other independent activities of a similar character
shall be taxable only in that State except in the following circumstances when
such income may also be taxed in the other Contracting State:

a.if he has a fixed
base regularly available to him in the other Contracting State for the purpose
of performing his activities; in that case, only so much of the income as is
attributable to that fixed base may be taxed in that other State; or

b.if his stay in the other
Contracting State is for a period or periods amounting to or exceeding in the
aggregate 183 days in the relevant "previous year" or "calendar
year", as the case may be, in that case, only so much of the income as is
derived from his activities performed in that other State may be taxed in that
other state.

1.

2.The term
"professional services" includes independent, scientific, literary,
artistic, educational or teaching activities, as well as the independent
activities of physicians, surgeons, lawyers, engineers, architects, dentists
and accountants.

Article
17

DEPENDENT
PERSONAL SERVICES

1.Subject to the
provisions of articles 18, 19, 20, 21, 22 and 23, salaries, wages and other
similar remuneration derived by a resident of Contracting State in respect of
an employment shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment is so exercised,
such remuneration as is derived therefrom may be taxed in that other State.

2.Notwithstanding the
provisions of paragraph 1, remuneration derived by a resident of a Contracting
State in respect of an employment exercised in the other Contracting State
shall be taxable only in the first-mentioned State if:

a.the recipient is
present in the other State for a period or periods not exceeding in the
aggregate 183 days in the relevant "previous year" or "calendar
year", as the case may be; and

b.the remuneration is
paid by, or on behalf of, an employer who is not a resident of the other State;
and

c.the remuneration is
not borne by a permanent establishment or a fixed base which the employer has
in the other State.

1.

2.

3.Notwithstanding the
preceding provisions of this article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operating in international
traffic by an enterprise of a Contracting State may be taxed in that State.

Article
18

DIRECTORS'
FEES AND REMUNERATION OF TOP LEVEL MANAGERIAL OFFICIALS

1.Directors' fees and
other similar payments derived by a resident of a Contracting State in his
capacity as a member of the Board of Directors of a company which is a resident
of the other Contracting State may be taxed in that other State.

2.Salaries, wages and
other similar remuneration derived by a resident of a Contracting State in his
capacity as an official in a top-level managerial position of a company which
is a resident of the other Contracting State may be taxed in that other State.

Article
19

ARTISTES
AND ATHLETES

1.Notwithstanding the
provisions of articles 16 and 17, income derived by a resident of Contracting
State as an entertainer such as theatre, motion picture, radio or television
artiste or a musician or as an athlete, from his personal activities as such exercised
in the other Contracting State may be taxed in that other State.

2.Where income in
respect of personal activities exercised by an entertainer or athlete in his
capacity as such accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the provisions of articles 7,
16 and 17, be taxed in the Contracting State in which the activities of the
entertainer or athlete are exercised.

3.Notwithstanding the
provisions of paragraph 1, income derived by an entertainer or an athlete who
is a resident of a Contracting State from his personal activities as such
exercised in the other Contracting State, shall be taxable only in the
first-mentioned Contracting State, if the activities in the other Contracting
State are supported wholly or substantially from the public funds of the
first-mentioned Contracting State, including any of its political sub-
divisions, administrative territorial units or local authorities.

4.Notwithstanding the
provisions of paragraph 2 and articles 7, 16 and 17, where income in respect of
personal activities exercised by an entertainer or an athlete in his capacity
as such in a Contracting State accrues not to the entertainer or athlete
himself but to another person, that income shall be taxable only in the other
Contracting State, if that other person is supported wholly or substantially
from the public funds of that other State, including any of its political
sub-divisions, administrative territorial units or local authorities.

Article
20

REMUNERATION
AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE

1.

a.Remuneration, other
than a pension, paid by a Contracting State, a political sub-division, an
administrative territorial unit or a local authority thereof to an individual
in respect of services rendered to that State, sub-division, unit or authority
shall be taxable only in that State.

b.However, such
remuneration shall be taxable only in the other Contracting State if the
services are rendered in that other State and the in individual is a resident
of that State who:

i.is
a national of that State; or

ii.did
not become a resident of that State solely for the purpose of rendering the
services.

1.

2.

a.Any pension paid by,
or out of funds created by a Contracting State, a political sub-division, an
administrative territorial unit or a local authority thereof to an individual
in respect of services rendered to that State, sub-division, unit or authority
shall be taxable only in that State.

b.However, such pension
shall be taxable only in the other Contracting State if the individual is a
resident of, and a national of that other State.

1.

2.

3.The provisions of
articles 17, 18 and 19 shall apply to remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting
State, a political sub-division, an administrative territorial unit or a local
authority thereof.

Article
21

NON-GOVERNMENT
PENSIONS AND ANNUITIES

1.Any pension, other
than a pension referred to in article 20 or any annuity derived by a resident
of Contracting State from sources within the other Contracting State may be
taxed only in the first-mentioned Contracting State.

2.The term
"pension" means a periodic payment made in consideration of past
services or by way of compensation for injuries received in the course of
performance of services.

3.The term
"annuity" means a stated sum payable periodically as stated times
during life or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full consideration
in money or money's worth.

Article
22

STUDENTS,
APPRENTICES AND PERSONS SENT FOR SPECIALISATION

1.An individual who is
or was resident of one of the other Contracting State and who is temporarily
present in the other Contracting State solely:

a.as a student at a
recognised university, college or school in that other State; or

b.as a business
apprentice; or

c.as the recipient of a
grant, allowance or award for the primary purpose of study from a religious,
charitable, scientific, or educational organisation; shall be exempt from tax
in that other State for a period of six years from his arrival in that other
Contracting State in respect of -

i.the
remittance from abroad for the purposes of his maintenance, education, study or
training;

ii.the
grant, allowance or award; and

iii.any
remuneration from abroad.

1.

2.The same exemption
shall apply to income derived by the above- mentioned individual from an employment
which he exercises in the other Contracting State in order to supplement his
means for maintenance, education, training and other expenses for
specialisation, for a period limited to two years from his arrival in that
other State.

3.A resident of one of
the Contracting States present in the other Contracting State under
arrangements with the Government of that other State or any agency or
instrumentality thereof solely for the purpose of training, study or
orientation shall be exempt from tax for a period not exceeding two years from
his arrival in that other Contracting State in respect of remuneration received
by him on account of such training or study.

4.For the purposes of
paragraph 1, the term "recognised university, college or school"
means a university, college or school which has been recognised in this regard
by the competent authority of the concerned Contracting State.

Article
23

PROFESSORS,
TEACHERS AND RESEARCH SCHOLARS

1.A professor or
teacher who is or was a resident of one of the Contracting States immediately
before visiting the other Contracting State for the purpose of teaching or
engaging in research, or both, at a university, college, school or other
approved institution in that other Contracting State shall be exempt from tax in
that other State on any remuneration for such teaching or research for a period
not exceeding two years from the date of his arrival in that other State.

2.This article shall
not apply to income from research if such research is undertaken primarily for
the private benefit of specific person or persons.

3.For the purposes of
this article and article 22, an individual shall be deemed to be a resident of
a Contracting State, if he is resident in that Contracting State in the
"previous year" or the "calendar year", as the case may be,
in which he visits the other Contracting State or in the immediately preceding
"previous year" or the "calendar year"

4.For the purposes of
paragraph 1, "approved institution" means an institution which has
been approved in this regard by the competent authority of the concerned
Contracting State.

Article
24

OTHER
INCOME

1.Items of income of a
resident of a Contracting State, wherever arising, which are not expressly
dealt with in the foregoing articles of this Convention, shall be taxable only
in that Contracting State.

2.The provisions of
paragraph 1 shall not apply to income, other than income from immovable
property as defined in paragraph 2 and article 6, if the recipient of such
income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the income is
paid is effectively connected with such permanent establishment or fixed base.
In such cases, the provisions of article 7 or article 16, as the case may be,
shall apply.

3.Notwithstanding the
provisions of paragraphs 1 and 2, items of income of a resident of a
Contracting State not dealt with in the foregoing articles of this Convention,
and arising in the other Contracting State may also be taxed in that other
State.

Article
25

AVOIDANCE
OF DOUBLE TAXATION

1.The laws in force in
either of the Contracting States shall continue to govern the taxation of
income in the respective Contracting States except where provisions to the
contrary are made in the Convention.